We saw them as we passed through Westminster Square in a cab on Saturday. They were a small crowd of protesters, dressed in padded jackets, scarves and knit hats, for it was very cold. Tomorrow is the first day of spring, but it still feels like mid-winter in England.

This weekend marked the third anniversary of the war in Iraq. Against whom the war is being fought, or why, has yet to be clarified, but the cost has risen to nearly $10 billion per month — including the on-going pacification of Afghanistan — but according to press reports, there are still “insurgents” in the Middle East who resist the U.S. Empire’s benevolence.

America is making history. It is not the first empire to rely on financing from its rivals — the English counted on the United States to pay for World War I — but it is the first empire, ever, to squander its borrowed money and its military strength in a war against nobody.

And now, along comes the former prime minister of Iraq, Ayad Allawi, who says the country has fallen into civil war. Not so, claims the vice president of the United States of America. “What civil war?” asks the man who mistook a lawyer for a duck, “I don’t see any civil war.”

A civil war was not supposed to happen. According to new conservative theory when a nation finally gets the golden gift of democracy, history comes to a halt. No more civil wars. No more revolutions. No more upheavals. Why bother with bloodshed when you can just go to the polls and rob your neighbors legally?

But there on page five of Sunday’s Times of London, is a photo of Mr. End of History himself — Francis Fukayama — standing up against a wall as though he were about to be shot.

We had a lot of fun with the "End of History" concept. It is so arrogant…so imbecilic…so preposterous, we chuckled every time we said the words. But, it helped explain why the options market had gone dead and why Americans are ready to go so deep into debt. It explained why investors buy 30-year U.S. debt at less than 5% yields, why people lend money to Third World countries at yields so low, you’d think they were going to pay the money back, and why Dow stocks still sell for 20 times earnings. Nobody expects history to cause any trouble.

“End of history? Beginning of nonsense,” Maggie Thatcher is said to have remarked. But investors and neocons loved the idea. They don’t realize it themselves, of course, but the new conservatives are a species of Marxists — not followers of Karl, but of Harpo, Chico and Groucho — with the world-improving pretensions and messianic delusions of Lenin and Che. They think they can build a better world by telling other people what to do. They are not the first to believe it, but they must be among the most inept.

But what’s this? Even Francis Fukayama has come to see what conceited claptrap it is.

“I’m an apostate,” he tells the Times. In his new book After the Neocons, which is due out this week, Fukayama explains, “I have concluded that neoconservativism, both as a symbol and a body of thought, has evolved into something I can no longer support…”

“When [Bush] stood for president, he talked about having a ‘humble’ foreign policy and attacked nation building, and since then has talked himself into believing [just the opposite]…

“I’m not shocked, I’m completely appalled by the sheer level of incompetence. If you are going to be a benevolent hegemon, [a reference to America’s status as the sole superpower], you had better be good at it.”

On the evidence, the Bush administration is particularly bad at empire. Neither the bread and circuses at home nor the wars around the periphery seem to go very well. According to Andrew Sullivan, also writing in the Times, in addition to “flawed structural decisions — to invade and occupy Iraq with half the troops needed, to add trillions to the national debt with no way on earth to pay them back, to expend a vast amount of energy on social security reform (and get no social security reform anyway) while Iraq went to hell…” Bush also launched a huge and expensive entitlement for prescription drugs as a way to win votes, and then so botched the execution that the elderly are just itching to go to the polls in November to vote Democrat.”

u2022 USA Today writes, “More Americans fell behind on their mortgage payments at the end of last year as they struggled in the face of hurricane damage, rising interest rates, higher gas prices and holiday credit card bills, the Mortgage Bankers Association said Thursday.

“The percentage of Americans who were delinquent on their home loans rose to 4.7% in the fourth quarter, the highest level since mid-2003. Late mortgage payments soared in the hurricane-stricken states of Louisiana and Mississippi. (And homes going into foreclosure reached alarming levels in a handful of Midwest states — Ohio, Indiana and Michigan — that were once the backbone of industrial America but have seen an exodus of manufacturing jobs.)"

It’s happening…more and more people can’t pay their mortgages — people who had no business owning a home to begin with. These subprime borrowers had been propping up the faltering housing market for quite some time…and now they seem to be filtering out of the situation. The effects on our economy should be interesting to say the least.

u2022 Yes, the exodus of power and money continues. In the West, it is hard for a working stiff to find an industry with rising wages. In the East, employers are increasing wages by 10% per year — and more. Business Week reports on one factory in Dongguan, China, that has had to raise wages by 40% in 12 months — just to attract labor. There’s a “talent crunch” in China, says BW. Skilled laborers without a job are harder and harder to find. Employers are forced to raise salaries and improve living conditions.

u2022 But, factory work in America has not been completely eliminated. We read in the paper last week that a Korean automaker will build an assembly plant in Georgia. The factory will employ 2,000 to 2,500 workers. In order to attract the business, the state of Georgia, and the local community, we suppose, had to pony up $160 million worth of grants and tax benefits.

u2022 Now Buffett! Investors have short memories and a fixation on the here and now. No one cares what dead people think. No one bothers to ask their opinions. No stockbrokers solicit their business. Even before an old investor goes to his grave, the young whippersnappers assume he has “lost touch” with the modern, dynamic financial world.

“Maybe it is his age, his probable retirement or the mediocre performance of Berskshire Hathaway’s shares in the past two years,” begins Matthew Lynn in the International Herald Tribune. “Buffet’s most recent predictions leave the impression that he is out of touch. He looks at new, innovative trends in the market and condemns them as dangerous because he may not understand them so well.”

Our guess is that Buffett understands the dollar, derivatives, and hedge funds better than Mr. Lynn. No, the dollar hasn’t yet gone down — not yet. And no, derivatives have not yet proven to be the “weapons of mass financial destruction” that Warren warned about — not yet. And no, people have not yet lost a fortune in hedge funds. But give them time. History has not stopped — neither in politics nor in finance.

Bill Bonner is a New York Times bestselling author and founder of Agora, one of the largest independent financial publishers in the world. If you would like to read more of Bill’s essays, sign-up for his free daily e-letter at Bill Bonner’s Diary of a Rogue Economist.